Law (2008) [1]

Examined the role trade and capital openness on financial sector development in Malaysia

ARDL based on ECM

Rule of law, Trade and capital account openness positively affect banking sector development, but the interaction term is insignificant. Rule of law, Trade and Capital account openness are insignificant determinants of stock market development. In the short run however, openness to trade and Capital account negatively affect financial sector development while the interaction term promotes financial sector development.


Law and Shah Habibullah (2009) [8]

Investigate the role of institution, Trade and Financial liberalization on financial development

Using annual data from 1980-2001, in a panel of 27 countries. Using dynamic GMM and Pooled Mean Group

Institutional factors and trade openness are important determinants of both banking and stock market development. The impact of financial liberalization is mixed.


Chin and Ito (2003) [2]

Examined the impact of financial openness on financial development

Using annual data from 1980-2000 in a panel of 108 countries

Financial openness promotes stock market development. Legal development, trade openness, and banking sector development are pre-conditions for capital account openness. Certain threshold of legal development especially general laws is important to stock market development. Banking sector and stock market developments are complementary.


Ben-Naceau, Ghazouani, and Omran (2008) [11]

Probed the effect of stock market liberalization on economic growth

Using annual data from 1979-2005 among 11 MENA countries and employing System GMM and Non-Parametric methods.

Financial liberalization leads to improvement in the financial sector. Financial liberalization affects stock market development negative and positive in the short and long runs respectively. Stock market liberalization is insignificant to private investment. Developed stock market, trade openness, and less government intervention are prerequisite to stock market liberalization.


Demetriades and Luintel (2007) [3]

Investigate the cost of financial repression in India.

Using annual data from 1960-1991 and by means of VECM (DOLS and SOLS).

Repression has substantial negative impact on financial sector development, and economic growth.